Hourly hiring has long been a job that’s never done, with the hospitality and retail industries consistently hovering over 100%. The labor shortages brought on by the pandemic heightened this problem, and unfortunately, it’s a challenge that continues to press on. Today, 79% of operators report struggling to find staff. And that’s no surprise considering there’s 87,000 less hourly workers on the hunt for a job than pre-pandemic. This shortage has led to a 20-day average hiring process, severely impacting profits.
Companies that can’t meet customer demand due to understaffing lose an estimated 10-25% of revenue per location, according to Fourth company data. As one retail manager described it:
“The recruiting crisis we’ve faced over the past couple years has turned into a major revenue problem. We’re losing thousands in sales each week because we don’t have the staff to stay open our full hours.”
Engaging and retaining hourly workers is no easy task, either. Disengaged workers cost employers up to $8,000 per person annually. And with turnover rates currently sitting anywhere from 150-200%, replacing and training each new hourly employee costs on average $1,800, at minimum.
In search of innovative solutions, many in the industry have started looking to artificial intelligence and automation to help optimize their recruitment process, with the goal of hiring qualified candidates with speed and ease. But simply implementing new technology alone won’t solve all the complex hiring challenges.
The key to sustainable success is understanding when to use automation and when to use AI. Let’s explore why it’s time to embrace AI, when you shouldn’t, and who’s leading the pack within the industry.
The worker shortage has made implementing a fast and efficient hiring process imperative for hospitality and retail businesses striving to rebound from the pandemic. Here are some of the key factors driving the urgent need for AI powered recruiting software:
On the surface, artificial intelligence (AI) and automation seem like ideal solutions to fix many broken hiring and recruitment processes. It can help talent acquisition leaders:
But we’d be remiss to continue this conversation without addressing the first question many savvy hiring managers have: what are the potential risks and downsides of replacing humans with ai recruiting software.
There’s a place for human interaction, a place for automation, and a place for AI in the HR industry. The secret to sustainable success is understanding when each comes into play to best optimize your recruiting workflow.
The answer lies between avoiding AI altogether or jumping in blindly. Here are best practices businesses should keep in mind:
Any time you’re dealing with individual candidates, keep humans involved in final assessments and hiring decisions. However, use automation to pre-screen candidates and to better handle high-volume administrative tasks like scheduling interviews.
For the recruiting teams, for example, set up automated questionnaires candidates must complete. Candidates who answer all questions correctly can receive an immediate invitation to schedule an interview via an online calendar. This eliminates the need for recruiters to manually review every single application that comes in and spend time with the common back and forth phone calls and emails required to make contact with applicants.
You can screen potential candidates only for basic qualifications without introducing AI bias against individuals. For example, if they’re of legal age, if they have certain job experience, or if they can work the hours you need. Just be sure to still allow for manual review in case the automated screening incorrectly rejects a qualified applicant.
AI performs best when optimizing processes based on past data, not assessing individuals. For instance, use machine learning to analyze historical hiring patterns, allowing businesses to forecast upcoming staffing needs with greater accuracy than human biases. One retail chain saw a 20% improvement in labor forecasting accuracy after implementing this technique. The AI considered sales trends, seasonality, and other data to predict needs 4-8 weeks out. When you know when you can afford to work with less employees, you can make the best use of the staff you do have!
Another prime use of AI is programmatic job bidding. Algorithms can automatically shift budget between sites like Indeed, ZipRecruiter, and Google Job Boards. Using historical candidate data, it auto-shifts budget to boards and time slots where you’ve historically hired more applicants from.
Thoroughly evaluate any AI and recruiting technology solutions before buying. Ensure any AI-powered software tools allow for sufficient transparency, quality candidates, and human oversight over AI recommendations.
Partner with providers focused on the hourly recruiting industry and who offer both AI and automation tools to simplify repetitive manual processes and optimize data-driven recruiting activities. Ask tough questions upfront and verify vendors’ AI models are trained responsibly to avoid biases. The right customized solutions can drive major efficiency gains without unwanted risks.
Fast food giant McDonald’s speeds up applicant and screening interview process by using AI chatbots to interact with candidates. After asking about work authorization, it asks personality questions to determine if someone demonstrates key traits like customer service orientation. This provides instant screening without a human recruiter spending time on it.
Clothing retail chain American Eagle Outfitters implemented automated scheduling tools that allow candidates to self-select interview times themselves. Once they complete a basic questionnaire, they simply choose an open slot on the hiring manager’s calendar. This eliminates the time-consuming friction of manually coordinating interviews with ideal candidates.
UK-based Charcoal Chicken, a fast casual dining chain, uses AI algorithms to automatically optimize its job advertising budget and placement across major sites like Indeed. In just 6 weeks, this increased applicant volume 3x and reduced cost per hire from $6,000 to $430.
Pizza chain Domino’s worked with conversational AI provider to implement ai recruiting software with an automated chatbot recruiter. It engages candidates 24/7 via text and voice, answering common questions, screen resumes and scheduling interviews. This provides a faster, more convenient candidate experience.
By optimizing job ad targeting and budget allocation using AI, Starbucks was able to reduce cost per click by 25% while improving candidate quality.
The recruiting crisis facing hospitality and retail will likely continue in the coming years. While AI, machine learning, and automation alone won’t solve every hiring challenge, applied strategically they can transform your talent acquisition process.
The risks around artificial intelligence, algorithmic bias, transparency, and misuse of applicant data are real. But avoiding AI altogether means missing out on potential benefits as well. Look for opportunities to incorporate AI and automation carefully, with appropriate checks and balances.
Vet potential talent acquisition solutions thoroughly and ask vendors tough questions. With the right recruiting technologies tailored to your needs, you can make your ability to hire top talent your no.1 competitive advantage.
To learn more about AI and automating hourly recruiting, watch our on-demand educational webinar.
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